Analysis of Hourly & Annual GHG Emissions: Accounting for Hydrogen Production

As the U.S. Treasury Department designs the guidance that will determine which projects qualify for the 45V clean hydrogen Production Tax Credit (PTC) included in the Inflation Reduction Act (IRA), a new analysis from the American Council on Renewable Energy (ACORE) and Energy and Environmental Economics, Inc. (E3) compares the carbon emissions and production costs associated with the two primary accounting approaches: an “hourly match” requirement versus an “annual match” requirement.

E3’s analysis included a robust assessment of the marginal impact of new hydrogen electrolyzer load and new clean energy generation across dozens of scenarios, including multiple electricity markets and several different clean energy portfolios. The analysis calculated the hourly impact of both generation and load based on marginal grid carbon emissions rates, finding that adding clean energy generation in equal quantities to electrolzyer load using annual matching approach results in very low to negative net carbon emissions relative to an hourly matching approach. Moreover, an hourly matching requirement would expose clean energy purchasers to very significant costs and market risks relative to annual matching, with very small to negative environmental benefits.